With home prices down 22 percent from their peak in 2006, this might seem an inopportune time to roll out new products for the property market. But Investment Instruments Corp. – the company behind the Web services Rentomatic and Rentometer, the much-talked-about tool that lets people compare their rent to their neighbors’ – has recently upgraded its services.

Owen Johnson, a Providence resident who co-founded Investment Instruments in 2004, talked with Providence Business News about the latest updates to Rentomatic and how is company and its clients are handling the housing crunch.

PBN: You have recently made some changes to Rentomatic. Could you describe those?

JOHNSON: Investment Instruments has updated the design of our Rentomatic Web site to better communicate the benefits of our services, specifically for our landlord customers. The additions include complete income and expense tracking and tax reporting for all of our offerings, as well as added improvements to our rent billing and processing service. We have also added a lower price point for smaller landlords and a free 14-day trial.

PBN: Generally speaking, how do you see technology changing the rental market?

JOHNSON: People worldwide have been conducting financial transactions online for years, but until recently the rental market has been stuck in the past. New technologies are saving landlords and tenants time and money by providing them easy ways to compare properties and pay rents online. Free Web sites like Craigslist and our Rentometer allow people to quickly search for apartments and compare rents in a neighborhood. Rentomatic supports the next step of the renting process as an online rent-management system for landlords and tenants to collect or pay rent, communicate about maintenance issues, advertise vacancies and build a payment history. As a tenant, there are more options for paying your rent than just by paper check. For landlords, technology is cutting down trips to the bank for deposits. Technology is helping the business of real estate to become more transparent by giving both sides immediate access to the communications and information they need to conduct business with a high level of trust.

PBN: Your company was an early adopter of the open source Web application framework Ruby on Rails. What was the thinking behind that?

JOHNSON: Investment Instruments’ founding team has a strong Web-technology background, having built custom Web servers and Web architectures back in the mid-’90s, before standard frameworks existed. When we moved from the prototype to production phase, we evaluated several technologies, including Ruby on Rails, which was just being launched. We loved what we saw – Rails provides an amazing platform to quickly build complex Web applications.

There is a persistent rumor that Rails is not stable enough or cannot scale. We have never had any issues and don’t foresee any in the future. The platform is only one part of the application; solid system design and architecture is the other. Platforms enable, but no platform can save a technologist from poor design. If I were looking to build a Web application from scratch today, I’d only consider two platforms: Ruby on Rails and Python with Django.

PBN: How have your customers been impacted by the downturn in housing prices?

JOHNSON: We are seeing more accidental landlords – people who choose to rent out a property that they were originally intending to sell. These folks range from real estate speculators to individuals who are relocating for a job, who would be under water on their investment if they sold. We’ve found many property owners are using Rentometer to calculate the cost of renting out versus selling. Conversely, renters are using the tool to determine if they should remain renters or become buyers. Overall, certain areas are experiencing an increase in rental housing inventory, making it that much more important for both sides to get informed about the market and compare rates.

PBN: How does the Rentometer do its calculations? Do you ever get pushback from landlords about the results, or do they generally accept it?

JOHNSON: We collect data from public listings and also receive information directly from leasing companies. Each Rentometer search typically compares a particular unit with hundreds of rentals in a neighborhood. When there are not enough listings in a particular neighborhood, a distance algorithm is used to collect the nearest comparable listings.

We hear a lot of opinions from our users, and most are extremely positive. Now and again, we receive a comment from a landlord who thinks we are telling them they are charging too much for their unit. The Rentometer however, does not tell a landlord what they should charge, it provides a competitive gauge with which the landlord can evaluate their unit against what other landlords in the area are charging.